Microfinance and the Missing Middle: Moving Upstream to Finance SGBs
Some experts have questioned what role microfinance institutions (MFIs) can play in financing and serving small businesses. While some MFIs have grown to accommodate more mainstream services, a study by CGAP has noted that the challenge for many MFIs to service the SGB market requires different systems, risk assessment tools, staff capacities, and more diverse product offerings. However, the need to finance and grow the SGB (small and growing businesses) sector exists as it constitutes the “missing middle”. Some multilateral organizations (e.g. IFC) have committed resources to finance SGB’s, but the gap is enormous.
Randall Kempner, Executive Director, Aspen Network of Development Entrepreneurs (ANDE), a global network of 260+ organizations that promotes small business entrepreneurship in emerging markets, observes how microfinance has contributed to alleviating poverty for a family and what services are available to do the same for a nation. Kempner, as moderator, offered these comments at a Microfinance Club of New York event.